MassMutual Financial Strategies. Avoiding the Double Tax Dilemma. with Whole Life Legacy 100 SM. insure invest retire.

Transcription

1 MassMutual Financial Strategies Avoiding the Double Tax Dilemma with Whole Life Legacy 1 SM insure invest retire Life Insurance

2 Avoiding the double tax dilemma with Whole Life Legacy 1 SM You've worked hard over the years and made sure to set money aside for the good life in retirement. You've made the maximum allowable contributions into your qualified retirement plan and, with some good investment returns, your diligence and a little luck, you've built quite a nest egg for yourself and your family. In fact, you've come to the realization that with the combined assets in all of your retirement savings vehicles, you may not even need all of the income that your qualified plan will produce. So, instead of liquidating your qualified plan when you retire, you are tempted to wait until your required beginning date and take the minimum distributions allowable in order to preserve the account balance with the intent of transferring as much as possible on to your heirs.* Sounds good, right? Well, what many people don't realize is that while qualified plans are great for deferring taxes during your lifetime, they can be one of the most taxed assets at death. Qualified plan balances may be subject to multiple levels of taxation: 1 Federal estate taxes can reduce the value of plan assets by 45%. Income taxes of up to 35% could apply to post-death distributions (lump sum or periodic). State estate and income taxes may be applicable. And, if the assets are passed to a grandchild Generation-skipping transfer taxes could reduce the value of the assets even further. Be sure to consult with your financial professional and qualified tax advisor for a complete understanding of qualified plan taxation. * Generally minimum distributions are not required to begin until April 1st of the calendar year after you reach age 7½. 1 This example assumes the Federal estate, gift and generation-skipping tax before amendment by the Economic Growth and Tax Relief Reconciliation Act of 21 (the Act). The Act contains a 'sunset' provision that repeals the Act as of December 31, 21. Consequently, all tax code sections changed under the Act will revert to their status prior to enactment once again on January 1, 211. Unless there is future legislation, the Act will only be effective through the year 21. NOT A BANK OR CREDIT UNION DEPOSIT OR OBLIGATION NOT FDIC OR NCUA-INSURED NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT GUARANTEED BY ANY BANK OR CREDIT UNION The decision to purchase life insurance should be based on long-term financial goals and the need for a death benefit. Life insurance is not an appropriate vehicle for short-term savings or short-term investment strategies. While the policy allows for access to the cash value in the short-term, such as through loans or partial surrenders, these transactions will impact the policy s death benefit if the values are not restored prior to the insured s death. You should know that there may be little to no cash value available for loans in the policy s early years. The information in this brochure is not written or intended as specific tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

3 Wouldn't you prefer your heirs and not the government receive the benefits of the qualified plan you've spent years growing? One strategy to accomplish this uses life insurance. The death benefit from a life insurance policy with appropriate gifting strategies, may provide the opportunity to replace the value of your qualified plan assets that could be lost due to estate and income taxes when you die. How It Works You can do some planning today for a more tax-efficient transfer of your qualified plan assets tomorrow. One alternative solution to consider is: 1. Begin a systematic distribution program today. 2. Make gifts of the after-tax value of the distributions to an irrevocable life insurance trust (ILIT) structured to qualify as annual exclusion gifts. 3. The trust purchases a life insurance policy using the gifts from your qualified plan distributions. 4. At your death, the life insurance death benefit will be paid income tax-free to the trust and, if properly structured, free of estate tax. The life insurance death benefit can be used to replace the value of the qualified plan that is lost to taxes allowing you to potentially pass on a greater legacy to your heirs.

4 Married with two children, both of whom are also married with young children of their own Has a total estate valued at over $5 million with $1 million in his qualified plan Has adequate sources of retirement income, and doesn't anticipate needing all of his qualified plan assets to support him in retirement. Wishes to pass on as much of his qualified plan assets as possible to his children. Gary's ultimate goal is to help ensure that his heirs receive a legacy equal to the full value of his qualified plan, in this case, $1 million. However, Gary is unsure of the best way to accomplish this. He knows if he simply waits until he is required to take his minimum distributions, he will not only spend down his qualified plan funds, but also neglect sheltering any of it from taxes when he dies. Assuming his wife predeceases him, this approach would leave his heirs with about one-third of his qualified plan value when all is said and done. A Strategy Gary has options. One alternative strategy involves Gary establishing an ILIT that will purchase a life insurance policy on his life. The death benefit will be used to replace the qualified plan assets that will be lost to taxes when he dies. By beginning to take his qualified plan distributions today at age 6, he can make annual gifts to the trust to cover the premium payments for the policy. Then when he dies (assuming his wife has predeceased him in the scenario), the remaining balance of the qualified plan, minus taxes, will pass to his heirs; and the death benefit proceeds from the life insurance policy will be paid to the trust. When combining the after-tax value of the qualified plan with the life insurance death benefit, Gary's heirs have the potential to receive an amount greater than the full value of his qualified plan. The Whole Life Legacy 1 SM Solution Meet Gary a 6-year-old software engineer Whole Life Legacy 1 SM gives Gary the ability to layer his coverage in such a way so he can buy enough life insurance to replace his taxes, while still keeping his gifts to the trust below the current annual gift tax exclusion amount of $12, per child ($24, total), avoiding any gift tax issues. Gary can use a combination of base Whole Life Legacy 1 and layer it with the Life Insurance Supplement Rider (LISR) and Additional Life Insurance Rider (ALIR). A Whole Life Legacy 1 policy with LISR large enough to meet his desired death benefit has an initial annual premium of $2, (assuming Select Preferred, Non-smoker class). Then, to take advantage of the maximum annual gift tax exclusion, an additional $4, can be paid into the ALIR annually, which will provide additional paid-up insurance coverage and dividend earning potential. By purchasing a whole life insurance policy like Legacy Whole Life 1, which has a guaranteed cash value component, the trustee will have the flexibility to access the cash should there be any immediate needs that the trust beneficiaries may have while Gary is alive. 3 These riders are available at an additional charge. Be advised that when LISR is purchased, a portion of your death benefit is not guaranteed. There are other product solutions that may also meet your planning needs. Be sure to discuss all of your options with your financial professional before making a purchase.

5 A Closer Look Regardless of when Gary dies, the combination of the death benefit from his Whole Life Legacy 1 policy and the remaining after-tax value of his qualified plan gives his heirs the potential to receive in excess of $1 million, even growing to nearly $2 million if he lives to age 9. Keep in mind, Gary will have to withdraw more than $24, annually from his qualified plan because: a) Each withdrawal will be subject to income tax (in this scenario, he'd have to withdraw $36,923 each year to net $24, after taxes); and b) He must begin taking his required minimum distributions once he reaches age 7½. Here are the results: Age at Death Cumulative Premium Gifted to Trust Qualified Plan Balance* (net to heirs after gifts, RMDs and taxes) Life Insurance Total Death Benefit** Total Amount To Heirs 61 $24, $351,758 $87,78 $1,159, $12, $386,341 $839,599 $1,225,94 7 $24, $439,167 $882,331 $1,321, $36, $477,713 $929,959 $1,41,29 8 $48, $496,48 $984,368 $1,48, $581,32 $483,491 $1,157,235 $1,64,726 9 $677,97 $428,557 $1,457,266 $1,885,823 This hypothetical example is illustrative only and should not be considered a representation of past or future investment results. Actual investment results may be more or less than those shown and will depend on a number of factors. * Qualified Plan Balance reflects the net amount that would transfer to heirs were Gary to die at that age, assuming a beginning of year withdrawal to make the gift to the trust, Required Minimum Distributions are taken beginning at attained age 7 1/2 and assuming growth of the assets at a 6% annual interest rate, 45% Federal Estate tax and 35% income tax rate. ** These values are not guaranteed. They include dividends that are neither estimates nor guarantees, but are based on the dividend scale in effect on the date this illustration was produced. Dividends in future years may be higher or lower depending on the company's experience. What if Gary dies first? If Gary dies before his spouse, her payments from the qualified plan qualify for the marital deduction, postponing the estate tax. The qualified plan payments will still be subject to income tax (as Income in Respect of a Decedent), but since they qualify for the marital deduction, there will be no deduction for estate taxes on those payments. The life insurance death benefit from Gary's policy will still be paid to the trust for the benefit of the trust beneficiaries. However, Gary's spouse may want to consider what taxes and costs her estate faces at her death. She may want to evaluate if more life insurance is needed to satisfy her estate planning needs. Gary will accomplish: Replacement of the qualified plan assets used to pay taxes. Through the trust, his heirs will receive a tax-free death benefit from the life insurance which, when added to the after-tax value of the qualified plan, equals or exceeds the initial value of his qualified plan balance. He will move some or most of his qualified plan assets out of his estate to reduce his estate tax burden, depending on when he dies.

6 MassMutual. For over 155 years, MassMutual and its affiliated financial professionals have helped guide our policyholders toward greater security and financial freedom. Our commitment is to help you focus on what you value most, clarify what you want to achieve in life, and understand how life s uncertainties could impact your plans and aspirations. We then help you implement flexible financial strategies for today and tomorrow. After all, it s not about where life takes you it s about where you take life. Built on a foundation of integrity, strength, and reliability, MassMutual can help you get there. For more information on Whole Life Legacy 1, or on any selection in MassMutual s portfolio of life insurance products, contact your MassMutual representative. The MassMutual Advantage One measure of a company s value to its customers is its financial strength. MassMutual s exceptional financial strength is underscored by ratings that are among the best in any industry: A.M. Best Company A++ (Superior) Moody s Investors Service Inc.... Aa1 (Excellent) Standard & Poor s Corp AAA (Extremely Strong) Fitch Ratings AAA (Exceptionally Strong) Ratings are as of January 15, 28 and are subject to change. Ratings are for Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company and MML Bay State Life Insurance Company.

7 We ll help you get there.sm 2 Distributions under the policy (including cash dividends, withdrawals and partial/full surrenders) are not subject to taxation up to the amount paid into the policy (cost basis). If the policy is a Modified Endowment Contract, policy loans and/or distributions are taxable to the extent of gain and are subject to a 1% tax penalty. Access to cash values through borrowing, withdrawals or partial surrenders can reduce the policy's cash value and death benefit, increase the chance the policy will lapse, and may result in a tax liability if the policy terminates before the death of the insured. Products and riders are available only in approved states. State variations may apply. Whole Life Legacy 1 (WL-27 and WL-NC-27 in North Carolina) is a level-premium, participating, permanent life insurance policy issued by Massachusetts Mutual Life Insurance Company, Springfield, MA

8 LIFE INSURANCE Legacy 1 Whole Life with LISR Basic Prepared for: Male CT Age 6 Male, Age 6 Presented by: MassMutual Financial Group 1295 State Street Springfield, MA 1111 October 16, 27 CRN: Page 1 of 12 MassMutual Financial Group is a marketing designation (or fleet name) for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliates. Massachusetts Mutual Life Insurance Company, 1295 State Street, Springfield, MA 1111

9 Legacy 1 Whole Life with LISR Illustration Summary Client Information Prepared for: Male CT Age 6, Male, Age 6 Underwriting Class: Select Preferred Non-Tobacco All underwriting classes are subject to approval. Policy: Generic Policy Name: Policy Form Number: Policy Information Legacy 1 Policy Whole Life Policy WL-CT-27 Initial Coverage Information Base Face Amount (BFA): $4,. LISR Target Face Amount (TFA): 4,. ALIR Scheduled Coverage Amount (At Issue): 7,78.32 Total Initial Death Benefit: $87,78.32 Initial Premium Information Premium Payment Mode: Annual Annual Base Premium: $15,33. Annual LISR Premium First Year: 4,67. Annual ALIR Scheduled Purchase Payment: 4,. Accelerated Death Benefit Rider: No Premium Charge Transfer of Insured Rider: No Premium Charge Total Initial Premium: $24,. Initial Dividend Option LISR/Flex as required by the Life Insurance Supplement Rider with Paid-Up Additions after crossover year. ALIR dividends used to purchase Paid-Up Additions. Dividends are not guaranteed and are subject to significant fluctuations over the lifetime of the policy. Changes in dividends will change all Non-Guaranteed values shown in this illustration. Base Face Amount Increases The Legacy 1 Whole Life policy allows for Base Face Amount increases upon application after the first policy year. Increases are not guaranteed. Evidence of insurability and underwriting approval of rate classes is required, unless the increase is through conversion of an eligible MassMutual policy or rider or the exercise of an insurability option. If an increase to the Base Face Amount is shown in this Illustration, it is subject to underwriting and evidence of insurability (except in the case of an eligible conversion or option exercise) and the new death benefit and contract premium will be reflected in the Numeric Summary and in the Tabular Values for the year selected. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 2 of 12

10 Legacy 1 Whole Life with LISR Illustration Summary Important Information This illustration assumes that the currently illustrated non-guaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown. Changing the premium payment mode may increase the overall cost of the policy. Please see Premium Payment Options in the Narrative Summary for more information. As illustrated, this policy would not become a Modified Endowment Contract (MEC) under the Internal Revenue Code based on the illustrated first-year premiums. This illustration cannot determine MEC status as the result of any premiums paid after the first policy year (including future premiums reflected in this illustration). Future premiums and/or policy changes may cause the policy to become a MEC. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 3 of 12

11 Legacy 1 Whole Life with LISR Narrative Summary What This Illustration Shows This illustration explains the important features of this MassMutual Legacy 1 Whole Life insurance policy and shows values over time on a guaranteed and non-guaranteed basis. It is designed to help you understand how this policy works. It is not a projection of how it will perform. The following pages provide a summary (and year-by-year figures) for required premiums, cash surrender values and death benefits, anticipated out-of-pocket premium payments, and other values for this policy. Many of the current values contained in this illustration depend on non-guaranteed dividends. What is Legacy 1 Whole Life? Legacy 1 Whole Life is a permanent life insurance policy providing a guaranteed face amount. Premiums are payable to age 1. The policy provides for cash value accumulation and for the payment of dividends as may be determined by the company. Additional Coverage Provided by Rider Additional Life Insurance Rider (ALIR) This rider provides for the purchase of additional participating paid-up life insurance coverage, based upon the amount of the rider payment made, net of the payment expense charge (currently equal to 7.5% of any rider payment, and guaranteed to not exceed 1% of any rider payment in future years) and any applicable modal charges. The payments for this rider can be made by scheduled or unscheduled amounts. Scheduled payments are selected by the policyowner at time of application. The minimum initial scheduled and unscheduled payment amount must each be at least $3 annually ($ Semi Annually; $77.67 Quarterly; $26.1 Monthly) Beginning in the fourth policy year and prior to the anniversary upon which the insured attains age 65, the scheduled payment can be increased by up to 1% per year without evidence of insurability, subject to limitations on total increases since issue. The policyowner can pay less than the billed scheduled payment and then make "catch-up" unscheduled payments within 2 years following the reduced rider payment. The "catch-up" payment must be made after the third policy year and prior to the policy anniversary upon which the insured attains age 65. Otherwise, unscheduled payments or increases to scheduled payments are subject to underwriting. Please refer to the contract form or the ALIR Information pages of this illustration for details and limitations. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 4 of 12

12 Legacy 1 Whole Life with LISR Narrative Summary Life Insurance Supplement Rider (LISR) This rider provides additional life insurance coverage and premium flexibility. The death benefit is level, referred to as the Target Face Amount (TFA), and is selected by the policyowner at the time of application. The TFA is comprised of one-year term insurance and paid-up additions. Every year, rider premiums, less a premium expense charge (currently equal to 8% of any rider premium, and guaranteed to not exceed 1% of any rider premium paid in future years) and any applicable modal charges, and policy dividends are used to purchase one-year term insurance, paid-up insurance additions or a combination of both to equal the TFA. The mix of term insurance and paid-up additions in the TFA changes each year. It is anticipated, but not guaranteed, that the amount of term insurance will decrease and the amount of paid-up additions will increase - until the crossover year. The crossover year is the point in time when the paid-up additional insurance is equal to the TFA and the purchase of one-year term is no longer necessary. The term charge rate schedule for the one-year term insurance coverage is not guaranteed. However, if each rider premium paid is at least equal to the rider's Completion Premium, the current term charge rate schedule will not change. Please refer to the contract form or the LISR Information page for details and limitations. The illustrated death benefits provided by supplemental insurance would be significantly affected by a change in the dividend option prior to the crossover age. Based on the illustrated dividend scale, the crossover age for this policy is attained age 82. LISR payments are based on illustrated dividends and current term and service charges which are not guaranteed and are subject to change. These payments do not guarantee the TFA. Important reminder - In any year showing a change in the amount of the LISR premium for other than contractual reasons, a Request for Amendment of Contract (form F5264) must be completed during the 9-day window beginning 6 days prior to the policy anniversary. IMPORTANT DIVIDEND INFORMATION As a MassMutual participating policyholder, you are eligible to receive an equitable portion of the Company's earnings, known as "divisible surplus", in the form of policy dividends. The surplus from which dividends are paid comes primarily from three sources: 1. Mortality Savings - The favorable margin between actual death claim experience and the amount expected based on the mortality table used to determine the premium. 2. Investment Earnings - Earnings on Company investments that exceed the guaranteed interest required to build up death benefit reserves and meet contractual obligations. The guaranteed interest rate for a particular policy or rider is set at issue and does not change over the life of the policy. The guaranteed interest rate is reflected in the policy's guaranteed cash value increases. 3. Expenses - The difference between actual expenses incurred and the expenses assumed in determining the premium. This illustration assumes that the dividend option is LISR/Flex for all years shown. Under this option, dividends, if any, together with the surrender, as necessary, of paid-up additions are used to pay for the LISR amount of one year term insurance. If the dividends together with the value of paid-up additions are insufficient to pay for the cost of the one year term insurance, you will be billed for the difference. Prior to the crossover age any part of the dividend which is not used to purchase one-year term insurance under the LISR will be used to purchase paid-up additions. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 5 of 12

13 Legacy 1 Whole Life with LISR Narrative Summary Non-guaranteed values are based on the 27 dividend schedule for policies with adjustable policy loan interest rate provision. It is important to understand that the payment of dividends is not guaranteed; dividends are a reflection of conditions that affect the Company and the cost of insurance. Dividend performance may, and most likely will, change over time. For this reason we strongly recommend that you look at an illustration showing a lower dividend scale to see the impact that this would have on policy values. This illustration is neither a projection nor an estimate of future results. Transfer of policy ownership to a qualified pension or profit sharing plan could result in different dividends. The first year dividend, although included in this illustration, is contingent on payment of the entire second year premium. IMPORTANT TAX INFORMATION As illustrated, this policy would not become a Modified Endowment Contract (MEC) under the Internal Revenue Code based on the illustrated first-year premiums. This illustration cannot determine MEC status as the result of any premiums paid after the first policy year (including future premiums reflected in this illustration). Future premiums and/or policy changes may cause the policy to become a MEC. Surrenders and distributions are subject to income tax to the extent they exceed the policy's cost basis. If the policy is a MEC, withdrawals and loans are taxable to the extent of gain and are subject to a 1% tax penalty. Death benefit proceeds from this policy are generally excludable from the beneficiary's gross income for income tax purposes (IRC Section 11(a)(1)). Policy loans on non-mec policies are not treated as distributions or subject to income tax (IRC Section 72). However, if the policy is not held until death, taxes are generally due on surrender or lapse and may in fact exceed the policy's Net Surrender Value if prior loans and surrenders were extensive. The information provided above is not written or intended as tax advice and may not be relied on for purposes of avoiding any federal tax penalty. Individuals are encouraged to seek advice from their own personal tax or legal counsel. Riders Illustrated Accelerated Death Benefit Rider (ABR) Transfer of Insured Rider (TIR) The Accelerated Death Benefit rider allows the policyowner to receive an advance of policy death benefits when Massachusetts Mutual Life Insurance Company receives satisfactory proof the insured has a terminal illness, expected to result in death within twelve months. The funds may be used for any purpose but typically will be used to pay medical and living expenses of the insured. Benefits payable under this rider may be taxable. This rider terminates upon acceleration. There is no cost for the addition of this rider however there is a fee if the rider is exercised. The Transfer of Insured Rider allows the policyholder the ability to exchange the original policy for a new policy on the life of another person, provided an insurable interest exists between the owner and the substitute inured, the new insured is not older than age 75 and evidence of insurability is provided. There is no cost for the addition of this rider however there is a fee if the rider is exercised. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 6 of 12

14 Legacy 1 Whole Life with LISR Narrative Summary Interest Adjusted Cost Comparison Index Policy Year 1 2 Life Insurance Surrender Cost Index $ $ 1.9 Life Insurance Net Payment Cost Index $ 3.13 $ The Interest Adjusted Cost Comparison Indices provide two means of comparing the relative cost of similar plans of insurance issued by the same company or by different companies. A low index number represents a lower cost than a higher one. These indices reflect the time value of money by applying a 5% interest factor to policy premiums, dividends, and for the surrender cost index, the 1 and 2 year cash values. The dividends used in calculating these indices are based on the current year's scale and are not guarantees nor estimates of future dividends. The indices do not consider: (1) the value of the services of an agent or company; (2) the relative strength and reputation of the Company and its actual dividend performance; or (3) differences in the policy provisions. Additional Information About This Illustration This illustration was produced using state dependent rate information valid through the end of October, 27 in Connecticut. Column Heading Definitions This illustration assumes an initial payment of $4,. annual for 3 years under the Additional Life Insurance Purchase Rider. Net outlay is based on a tax bracket of 28%. This illustration does not recognize the time value of money and should not be used to compare policy costs. See IAC section of the Narrative Summary page for policy cost information. The fully allocated expense method is used to allocate overhead expenses for all illustrations. Age Amount of One Year Term Annual Dividend Cash Value of Additions Contract Premium The age of the insured at the end of the policy year. The annual amount of term insurance purchased using the Life Insurance Supplement Rider (LISR) option. The total amount of annual dividend payable. These values are based on the illustrated dividend scale and are not guaranteed. The total cash value at the end of the year of the dividends used to purchase additional paid-up insurance and paid-up insurance purchased by Additional Life Insurance Rider (ALIR) and/or by Life Insurance Supplement Rider (LISR) payments. These values are based on the illustrated dividend scale and are not guaranteed. The gross premium that is required to be paid under this policy, including premiums for all riders for which benefits are shown in the illustration. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 7 of 12

15 Legacy 1 Whole Life with LISR Narrative Summary Guaranteed Cash Value Guaranteed Death Benefit Paid-Up Additions Total Cash Value Total Death Benefit Year The amount of the cash surrender value which is guaranteed under this policy. This amount includes any guaranteed cash values associated with payments under the Additional Life Insurance Rider (ALIR). Surrender of ALIR values to pay premiums or for any other reason will reduce the guaranteed cash value. The amount of death benefit which is guaranteed to be payable for this policy at death. This amount includes any guaranteed values associated with payments under the Additional Life Insurance Rider (ALIR). Surrender of ALIR values to pay premiums or for any other reason will reduce the guaranteed death benefit. The death benefit at the beginning of the year from dividends used to purchase additional paid-up insurance and payments into LISR.These values are based on the illustrated dividend scale and are not guaranteed. The total cash surrender value including all guaranteed and non-guaranteed values. These values are based on the illustrated dividend scale and are not guaranteed. This is the amount which would be payable if death occurred at the beginning of the policy year. These values are based on the illustrated dividend scale and are not guaranteed. The number of years the policy is assumed to have been in force. Key Terms Used in the Illustration Cash Surrender Value Death Benefit Completion Premium Midpoint Assumptions The first day of the policy year. All premium payments and other outlays are assumed to be made at the beginning of the year. The last day of the policy year. Dividends are assumed to be credited on this date. All cash values are shown as of the end of the policy year. The value available upon surrender of the contract. The value available upon death of the insured. The Completion Premium is the smallest level rider premium, at the frequency elected, that is needed to be paid for this year and all future years, based upon the current dividend scale and current One-Year Term Charge Rates for this rider, that would result in this rider becoming Rider Paid In Full on the Policy Anniversary Date nearest the Insured's Attained Age 1. Values are calculated assuming that the dividends are reduced by 5% and any policy charges included are an average between the current and guaranteed charges. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 8 of 12

16 Legacy 1 Whole Life with LISR Narrative Summary Premium Payment Options: You may pay premiums once a year (annually), twice a year (semiannually), four times a year (quarterly) or twelve times a year (monthly). You may pay premiums twelve times a year (monthly) only by pre-authorized electronic transfer. If you pay annual premiums by installments, there will be an additional charge. The additional charge is shown in dollars and as annual percentage rates in the table below. Premium Premium Number of Total Additional Additional Frequency Payment Payments Per Premium Per Charge Charge (Including Year Year (In Dollars) (As the Annual Installment Percentage Payment Rate or APR) Charge) Annual $24,. 1 $24,. $. Semi-Annual $12, $24,561.6 $ % Quarterly $6, $24,854.4 $ % Monthly $2, $25,56. $1, % Consider Additional Coverage In some cases, the cost per unit of the Legacy 1 Whole Life policy may be lower with a higher Base Face Amount. You should consult with your agent about whether applying for more coverage is appropriate. Additional underwriting requirements may apply to larger face amounts, and premiums may be higher. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 9 of 12

17 Legacy 1 Whole Life with LISR Policy: Legacy 1 Whole Life Policy with LISR Base Policy Face Amount: $4,. Annual Premium: $15,33. Amount of TFA: $4,. First Year Annual LISR Payment: $4,67. Riders: ABR ALIR LISR TIR First Year Annual Scheduled ALIR Payment: $4,. Numeric Summary and Signature Page Dividend Option: LISR/Flex as required by the Life Insurance Supplement Rider with Paid-Up Additions after crossover year. ALIR dividends used to purchase Paid-Up Additions. Dividends are not guaranteed and are subject to significant fluctuations over the lifetime of the policy. Changes in dividends will change all Non-Guaranteed values shown in this illustration. To help you understand how changes in non-guaranteed dividends may affect your future policy values, this Numeric Summary and Signature Page shows how your policy would perform based on each of the following dividend scenarios: 1) Guaranteed: The guaranteed policy values, i.e., zero dividends. 2) Non-Guaranteed Midpoint: 5% of the Company's currently illustrated dividend. 3) Non-Guaranteed Current: The Company's currently illustrated dividend. Contract Premium Non - Guaranteed Values Guaranteed Values Midpoint Assumptions Current Assumptions Cash Surrender Value Death Benefit Cash Surrender Value Death Benefit Cash Surrender Value Death Benefit Year 5 24, 58,88 436,811 73, ,179 89,21 839,599 Year 1 24, 142, ,16 172, ,375 23, ,331 Year 2 24, 35, , ,76 95, ,5 984,368 Age 7 24, 142, ,16 172, ,375 23, ,331 I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to significant fluctuations and could be either higher or lower. The agent has told me they are not guaranteed. I understand that this illustration is not a contract. The terms of the policy constitute the actual agreement of coverage. I further understand I have the right to request a hypothetical lower scale illustration to see the potential impact of a lower dividend interest rate on my policy values. I have read and understand the IMPORTANT TAX INFORMATION section in the Narrative Summary. Applicant (At time of application) Owner (At time of delivery) Date I certify that this illustration has been presented to the applicant and that I have explained that any non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with this illustration. Agent Date Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 1 of 12

18 Legacy 1 Whole Life with LISR Year Policy: Legacy 1 Whole Life Policy with LISR Base Policy Face Amount: $4,. Annual Premium: $15,33. Amount of TFA: $4,. First Year Annual LISR Payment: $4,67. Riders: ABR ALIR LISR TIR First Year Annual Scheduled ALIR Payment: $4,. Tabular Values Dividend Option: LISR/Flex as required by the Life Insurance Supplement Rider with Paid-Up Additions after crossover year. ALIR dividends used to purchase Paid-Up Additions. Dividends are not guaranteed and are subject to significant fluctuations over the lifetime of the policy. Changes in dividends will change all Non-Guaranteed values shown in this illustration Age Contract Premium 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 24, 19,33 19,33 19,33 19,33 Guaranteed Cash Value 3,87 11,165 26,922 42,824 58,88 75,96 91,521 18, , , , ,6 191,457 27,85 224,268 24, ,99 273, ,588 35, ,52 336, , , ,953 Guaranteed Death Benefit 47,78 415, , , , ,597 45, , , ,16 475,17 48, , , ,778 53,144 58,41 513, ,68 523, , , , , ,164 Annual Dividend ,31 5,24 5,742 6,656 7,525 8,374 9,286 1,119 11,17 12,365 13,836 15,42 16,766 19,71 21,289 23,5 25,829 28,255 3,318 32,837 35,313 37,825 Cash Value of Additions 3,18 6,557 13,662 21,52 3,141 39,741 5,31 61,868 74,53 88,181 13, , , , ,818 23,54 23,4 259, , ,35 368,521 47, , ,346 54, Non-Guaranteed Values---- Total Cash Value 6,987 17,722 4,584 64,343 89,21 114, ,831 17,61 199,622 23, , , , ,142 43,86 443, , ,34 582, ,5 689, ,584 8,64 859,6 92,572 Paid-Up Additions 6,1 12,57 18,98 31,52 44,748 59,153 74,612 91,26 18, , , , ,159 21, ,35 261,49 29, , , , , , , ,297 61,72 Amount of One Year Term 393,99 388, ,729 37,69 358,39 345,61 331, ,36 32, ,627 27, , ,38 217, , , , ,374 96,446 64,687 29,732 Total Death Benefit 87,78 815, , ,57 839, , , , , , ,41 9,678 91, , ,959 94,266 95, , , , ,67 1,1,381 1,56,934 1,15,886 1,157,235 Premiums Coverage Amount Annually Semi-Annually Quarterly Monthly Base Policy Insurance 4,. 15,33. 7, , , LISR (Year 1) 4,. 4,67. 2, , Scheduled ALIR (Year 1) N/A 4,. 2,46.8 1, Surrender of ALIR values to pay premiums or for any other purpose will reduce the Guaranteed Death Benefit and Guaranteed Cash Values. Non-guaranteed values include dividends which are neither estimates nor guarantees, but are based on the 27 dividend scale. The dividend scale is reviewed annually and it is likely that dividends in future years will be lower or higher depending on the Company's actual experience. For this reason, we strongly recommend that you look at a hypothetical lower scale illustration available upon request. Refer to the Narrative Summary for assumptions, explanations and additional information. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 11 of 12

19 Legacy 1 Whole Life with LISR Year Policy: Legacy 1 Whole Life Policy with LISR Base Policy Face Amount: $4,. Annual Premium: $15,33. Amount of TFA: $4,. First Year Annual LISR Payment: $4,67. Riders: ABR ALIR LISR TIR First Year Annual Scheduled ALIR Payment: $4,. Tabular Values Dividend Option: LISR/Flex as required by the Life Insurance Supplement Rider with Paid-Up Additions after crossover year. ALIR dividends used to purchase Paid-Up Additions. Dividends are not guaranteed and are subject to significant fluctuations over the lifetime of the policy. Changes in dividends will change all Non-Guaranteed values shown in this illustration Age Contract Premium 19,33 19,33 19,33 19,33 19,33 15,33 15,33 15,33 15,33 15,33 15,33 15,33 15,33 15,33 15,33 Guaranteed Cash Value 393,759 47,75 419, ,5 443, ,57 458, , , , ,95 492,253 5, , , ,19 53, , ,92 535, ,84 539, , ,17 544, , , ,256 55, ,67 553, , ,94 557,82 558,17 Guaranteed Death Benefit 551, ,131 56, ,882 Annual Dividend 4,399 43,565 47,159 49,974 52,78 55,526 58,148 6,457 62,689 64,834 66,891 69,188 71,16 72,98 74,188 74,847 72,224 74,361 76,495 78,721 8,996 83,37 85,712 88,161 9,692 93,296 95,938 98,657 11,479 14,384 17,342 11, , ,784 12,24 Cash Value of Additions 591, ,649 72, ,99 825,746 89, ,617 1,28,522 1,1,569 1,174,587 1,25,685 1,328,861 1,48,829 1,49,13 1,571,599 1,649,938 1,73,575 1,813,495 1,898,777 1,986,459 2,76,563 2,169,174 2,264,319 2,362,68 2,462,483 2,565,588 2,671,447 2,78,156 2,891,782 3,6,37 3,124,1 3,244,759 3,368,736 3,495,93 3,626, Non-Guaranteed Values---- Total Cash Value 985,26 1,52,723 1,122,76 1,195,41 1,269,437 1,342,51 1,416,732 1,493,472 1,572,186 1,652,88 1,735,59 1,821,114 1,99,64 2,1,542 2,97,74 2,178,128 2,26,773 2,345,659 2,432,87 2,522,43 2,614,368 2,78,765 2,85,647 2,95,86 3,7,135 3,111,827 3,219,218 3,329,412 3,442,467 3,558,437 3,677,395 3,799,433 3,924,639 4,52,985 4,184,414 Paid-Up Additions 659, , , , ,78 952,1 1,18,574 1,87,136 1,157,699 1,23,168 1,34,455 1,38,843 1,458,97 1,538,593 1,619,213 1,7,185 1,778,15 1,857,845 1,939,662 2,23,556 2,19,571 2,197,739 2,288,153 2,38,851 2,475,914 2,573,413 2,673,382 2,775,896 2,881,58 2,988,949 3,99,62 3,213,166 3,329,675 3,449,251 3,571,884 Amount of One Year Term Total Death Benefit ,5 3,819,92 4,389,19 3,697,821 4,267,1 Surrender of ALIR values to pay premiums or for any other purpose will reduce the Guaranteed Death Benefit and Guaranteed Cash Values. 1,211,19 1,267,918 1,328,45 1,391,527 1,457,266 1,521,289 1,587,763 1,656,325 1,726,888 1,799,357 1,873,644 1,95,32 2,28,159 2,17,782 2,188,42 2,269,374 2,347,24 2,427,34 2,58,851 2,592,745 2,678,76 2,766,928 2,857,342 2,95,4 3,45,13 3,142,62 3,242,571 3,345,85 3,45,247 3,558,138 3,668,89 3,782,355 3,898,864 4,18,44 4,141,73 Non-guaranteed values include dividends which are neither estimates nor guarantees, but are based on the 27 dividend scale. The dividend scale is reviewed annually and it is likely that dividends in future years will be lower or higher depending on the Company's actual experience. For this reason, we strongly recommend that you look at a hypothetical lower scale illustration available upon request. Refer to the Narrative Summary for assumptions, explanations and additional information. Prepared on: October 16, 27 Prepared for: Male CT Age 6 (Male, 6, Select Preferred Non-Tobacco) Version Number: 7.7 (CT) TAMRA: $63, Page 12 of 12

20 Massachusetts Mutual Life Insurance Company and affiliates, Springfield, MA Massachusetts Mutual Life Insurance Company and its affiliated insurance companies have received certification from IMSA, an industry organization dedicated to promoting ethical conduct in all customer contacts involving sales and service of individual life insurance and annuity and long term care products. Securities offered through registered representatives of MML Investors Services, Inc., 1295 State Street, Springfield, MA Massachusetts Mutual Life Insurance Company. All rights reserved. MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. LI CRN